The Freshwater Trust Explores Opportunities to Reduce Nutrients in San Francisco Bay Through Trading Program

April 18, 2017

Sacramento, CA — The Freshwater Trust (TFT), a freshwater conservation and restoration nonprofit, is working with the East Bay Municipal Utility District (EBMUD) to assess watershed-based opportunities to reduce nutrients and improve water quality in the San Francisco Bay.

TFT was contracted by EBMUD to explore how wastewater treatment plants in the San Francisco Bay could develop and implement a watershed-based collaborative nutrient trading program in the future. Trading programs are an approved alternative method of compliance with the Clean Water Act that can achieve greater nutrient reductions across a watershed at a lower cost when multiple parties work together.

Wastewater often contains nitrogen and phosphorus from human waste, food and detergents. High concentrations of these nutrients can lead to algal blooms that deplete the water of oxygen and cause dead zones. Although the Bay has historically been resilient to nutrient enrichment, scientists have observed indications of change in the Bay over the last 20 years and nutrient discharge limits may be required for Bay Area wastewater treatment plants.

The approach assessed by TFT and EBMUD would allow wastewater treatment plants discharge below their limits to sell credits to other individual dischargers. The concept would potentially create a market between some or all of the 37 treatment plants that discharge to the Bay. Plants could buy credits from other dischargers to achieve compliance at a lower cost than through immediately constructing system upgrades once required. In addition to representing a more economically efficient compliance mechanism, the proposed trading system could also lead to faster improvements for the watershed.

“One facility can meet their obligations under the Clean Water Act by paying another facility that has excess nutrient reductions to sell,” said Erik Ringelberg, California Director with TFT. “It’s a way of meeting compliance in a cost-effective, more rapid and environmentally beneficial way.”

The program being assessed for the Bay is an example of “Point Source-to-Point Source” Water Quality Trading (WQT), where one discharger is trading directly with another.

Point source-to-point source nutrient trading programs have been implemented in other large, complex coastal watersheds including the Long Island Sound and the Chesapeake Bay.

TFT operates “Point Source-to-Nonpoint Source” trading programs in Oregon, where a treatment plant (a point source of non-toxic pollutants, such as nutrients, phosphorus, sediment or elevated temperature), meets compliance through dispersed restoration actions in a watershed.

TFT’s largest program of this kind is with the City of Medford. To comply with the Clean Water Act, the city had to offset the impact of its warm-water discharge into the Rogue River. Instead of investing in engineered solutions, such as a cooling tower, the city worked with TFT to plant trees along key stretches of the river and its tributaries to produce shade. The amount of sun blocked by the trees is calculated as thermal credits and then purchased by the city. The alternative saved taxpayers more than $9.5 million. TFT also assessed the possibilities of adding a nonpoint source-trading program as an option for further reducing nutrients in the Bay through restoration in the future.

“Our research and analysis of both the opportunities and challenges tells us that a water quality trading program is feasible here in the Bay,” said Ringelberg. “It’s in the conceptual stages right now, but it’s clear there’s an opportunity to apply our experience in Oregon to California.”

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